Press conference by President of the Government

Madrid

President of the Government.- Good day. I appear here before you, as is traditional, on the last Friday of the year, to take stock of what the year we are now leaving behind has meant.

Before I do that, please allow me to list the most important agreements adopted in the Council of Ministers meeting held this morning, on which you will find extensive information in the Council Reference. I will highlight the most significant of these and those which affect the largest number of people:

• The necessary steps have been taken to bring into effect the 0.25% rise in pensions as established by the General Social Security Act.
• Furthermore, the Council of Ministers has approved an agreement in budget unavailability. Against a backdrop of an automatic extension to the 2016 Budget, it has been necessary to adopt this agreement so that the level of State spending is in line with the ceiling on spending approved for 2017, and consequently, meet our deficit commitments for that year within the framework of the Eurozone.
• An across-the-board rise of 8% in the minimum wage has also been approved, which means an increase to 707 euros a month. This rise, agreed with the Socialist Group, is the highest in 30 years and it is possible thanks to the improved general situation of the Spanish economy.

Should you require any clarification or further information on any of these issues, you can ask me at the end of my initial speech and I will hopefully be able to provide you with more details.

Now, if that is okay, let's take stock of this year 2016 which is into its last few hours, a year we could perhaps define as the year of uncertainty. I warn you that this opening speech may go on for a while since it is not easy to sum up what has happened in 2016 without allotting some time to it.

This has been a year of unexpected decisions, a year of unprecedented events and a year of political upheaval. This has been a year of great uncertainty not only in Spain but also overseas.

We have seen how President Trump has won November's elections in the United States. This has been a political turnaround of indubitable proportions with consequences that we will not know with certainty until the new administration takes over on January 20th.

I would also remind you of the results of the important referendums held in both Colombia and Italy, but above all in the United Kingdom, resulting in this country withdrawing from the European Union.

In Europe, we have seen in recent times, and particularly this year, the consolidation of extremist forces of different political hues, but all openly against the European integration project; populist forces that strive to harness the most adverse effects of this crisis and look for the wrong response to increasingly demanding challenges from our societies through nationalism, xenophobia and communism.

And in Spain, you all know what has happened in these last 12 months: we have gone through an unprecedented situation in our history, with a 10-month period of a caretaker government and a repeat of the general elections. However, it is true that we have managed to partially rectify the image and feeling of instability in recent months thanks to the agreements reached, firstly, to form a government, but also to meet our commitments with Europe and in other areas, which I will refer to later.

Allow me to underline this idea: whilst it is true that we have gone through a long and harmful period with a caretaker government and political stalemate, it is no less true that further harm has been averted and that the agreements reached and pacts made in recent months have allowed us to partially rectify this harm and mistrust that had arisen as a result of 10 months of political stalemate.

As you are aware, one of the most surprising aspects of 2016, both in Spain and abroad, is that this political uncertainty has not affected our economic recovery. The main reason for this is the strength of our economy. The reforms undertaken during the course of the last legislature have provided for sound and robust growth that we must ensure continues in the coming years.

Furthermore, the fact that we approved the General State Budget for 2016, despite the criticism received at the time, proved to be a prudent, effective and responsible decision. This Budget has acted as a safety net that has protected our economic recovery and job creation process by generating confidence against a backdrop of political uncertainty. Furthermore, this Budget for 2016 will continue to offer stability in 2017 until such time as a new one can be approved.

Obviously, if we had not had a Budget or if the reforms had not been well designed, we would never have been able to achieve the growth and job creation figures we have obtained this year.

2016 has seen very good economic figures in practically all areas.

In annual terms - I will talk about jobs firstly - the latest Labour Force Survey (Spanish acronym: EPA) published showed that 478,800 new jobs were created. The last quarter was the best quarter in terms of job creation in the last 11 years. Spain now has 18.5 million people in work, 1.5 million more that at the nadir of the crisis.

The decline in unemployment has also been very encouraging in 2016: there are now 530,000 fewer people out of work. For the first time in seven years, unemployment has fallen below the 4 million mark and the unemployment rate now stands at 18.9% of the active population. Whilst this is still clearly too high, we must remember where we started out. The unemployment rate almost reached 27%, and hence the rate has fallen by eight points in just three years. In the case of youth unemployment, this decline was 14 points and, in the case of the long-term unemployed, almost 900,000 people have found a job since the worst levels posted during the crisis.

Despite all the uncertainties, the Spanish economy will grow by 3.2% this year. This is the fastest rate of the main European economies and almost twice the Eurozone average.

This crisis has left us with many after effects that we are slowly recovering from, but it has also left us something positive - Spain has become an export powerhouse. The foreign trade sector now exceeds 33% of our Gross Domestic Product and the trend continues to rise. Our exports of goods and services are growing and they are varied. And the figures clearly demonstrate the make-up of our foreign trade sector: capital and semi-manufactured goods represent 31% of our exports and you then have exports of services other than tourism (16%), tourism (14%), the automotive sector (12%), food - the agri-food industry is acquiring great strength - (11%), consumer manufactures (8%) and energy products (7%).

So, as a result of this increase in exports, 2016 will be the sixth straight year in which the Spanish economy has achieved a positive foreign trade balance. This has undoubtedly been a key factor in the recovery of our economy and for job creation and shows, among other things, that small- and medium-sized enterprises, as well as large corporations, who have always done this, have thrown themselves into exporting and selling their products overseas.

2016 will also close as an historic year in terms of tourism. The figures were announced today, that 71 million inbound tourists have visited Spain, without including December, which constitutes a new all-time record. The average spend per inbound tourist has also increased considerably; up 8.4% on last year.

I don't wish to overwhelm you, but I do wish to mention other indicators that show the dynamic nature of our economy: retail sales have grown by 3.3%; sales by large corporations have grown by 2.6%; car registrations have risen by 11.1% in the year to date; property market prices have been up in the last 10 straight quarters and new companies are being created at a rate of 11% year-on-year in the last 12 months.

The only figure that has not progressed in 2016 according to expectations has been the public deficit. But, after the measures adopted earlier this year - among them, the order for the early close of budgetary spending and the reform of the partial payment of Corporate Income Tax for large corporations, agreed with the other parliamentary groups - we are now in a position to meet the new deficit target negotiated with Brussels of 4.6%. I would like to remind you that when we came to power, we found ourselves faced with a deficit in excess of 9%.

I believe that the effort made by Spanish society as a whole has been admirable and that this is worth mentioning. Among us all - including the different tiers of government - we have managed to return confidence and credibility to our public accounts, and we must continue doing this until such time as Spain manages to meet the requirements set in the Stability and Growth Pact.

As far as the political balance is concerned this year in Spain, it can be summed up in two ideas:

• It has taken too long to do what the Spanish people, common sense and the very interest of our nation called for a year ago.
• The caretaker government did everything possible to alleviate the consequences of the political stalemate.

You will remember that after the general elections in December, I publicly argued that the electoral result obliged all of the political forces to reach understandings and to achieve broad consensuses to undertake the reforms that Spain needs while maintaining our constitutional principles. So, after many months with a caretaker government, of countless parliamentary ups-and-downs and a second round of general elections, we are now, finally, carving out the path to forge these agreements.

The clear victory by the People's Party in the general elections in June has undoubtedly been decisive for this, but so has the responsible attitude shown by other political groups when considering the grave danger to the country that the calling of a third round of elections would have entailed.

Political dialogue began to bear fruit this summer: the agreements reached between the People's Party and Ciudadanos and the Canary Island Coalition came to fruition in the investiture session that dispelled any risk of a third round of elections. But, as I said back then, a government serves no purpose if it cannot operate as such. I believe that my government, and the parliamentary group that supports it, have made a tremendous effort to facilitate understanding with the opposition parties to reach agreements to the benefit of the Spanish people and thus avoid this period becoming a wasteland of parliamentary filibustering.

In my investiture speech, I offered major State pacts to the rest of the political forces, and right from the outset, we have established three lines of dialogue, with political parties, regional authorities and social stakeholders: political dialogue, social dialogue and regional dialogue.

And progress has been made in all these areas of action. In this legislature to date, in the time we have been in government, barely two months now, the government has submitted 11 initiatives of a legislative nature for their passage through Parliament: six Royal Decree-Laws, four Draft Laws and a Royal Legislative Decree, as well as two agreements setting the budget stability targets for the public authorities as a whole. I will remind you of some of them.

In regard to political dialogue, the most important aspect has been the broad parliamentary support for the government's proposal on the budget stability and public debt targets, and the ceiling on spending. This agreement, furthermore, has been accompanied by another on urgent tax measures.

Reaching an agreement on these two issues constitutes an important exercise in responsibility and has undoubtedly been an incredibly positive achievement, perhaps the most important one in these last two months. And people beyond our borders have noticed this exercise in responsibility. These agreements offer our public accounts stability, strengthen Spain's solvency abroad and maintain our path of economic growth and job creation.

We have also reached some important agreements in the field of education. The People's Party, the PSOE [Spanish Socialist Workers' Party] and Ciudadanos agreed on the first of this month to set up a parliamentary sub-committee to reach an education pact. In consequence, we have approved, also with widespread parliamentary support, a series of measures to extend the timetable for the implementation of the LOMCE [Constitutional law to improve educational quality].

In recent months, we have also agreed to set up a Standing Committee on Corruption and for Democratic Quality in the Lower House of Parliament. And unanimous approval was given to set up a parliamentary sub-committee to work on preparing the basis to reach a State Pact on gender-based violence.

Other sub-committees are also due to be set up in February, in agreement with the other parliamentary groups, in the new period of sessions, including one tasked with designing a National Justice Strategy and another to study the consequences of the United Kingdom withdrawing from the European Union, both for the Spanish economy and for our relations with the European Union.

Social dialogue also began back in November with the trade unions and business organisations. As you know, the suitability was studied there of raising the minimum wage. As I mentioned to you at the start of my speech, we proceeded to approve this rise earlier today after reaching an agreement with the Socialist Party.

In addition, the Toledo Pact committee has been set up to start working immediately with the aim of guaranteeing the sustainability of our pension system. I would remind you that new pensions in Spain have already reached an average of 1,500 euros, which represents 93% of the average salary.

Within the framework of social dialogue, the suitability was also studied of giving a new boost to youth employment. To that end, and also in agreement with the regional governments and political groups, the government approved a Royal Decree last week, that simplifies and strengthens the Youth Guarantee programme, which has been consolidated as one of the elements that has allowed us to reduce the unemployment rate among young people by 14 points.

I include two important agreements under this heading that have been forged at a political level, but which are of an undoubtedly social nature: the agreement with the Socialist Party to regulate and finance the Electricity Discount and to prevent electricity being cut off for those people in a vulnerable situation, and the agreement with Ciudadanos to ensure that the first law passed in this new legislature is a comprehensive law to support the self-employed.

I also wish to point out that an agreement exists within the framework of social dialogue to open by new rounds of negotiations on such issues as quality employment, special attention for the long-term unemployed, the 'social card' and the Law on Mutual Societies.

I will move on now to talk about regional dialogue. This has focused, firstly, on all the negotiations related to the ceiling on spending and the new deficit path agreed with Brussels. While we had a caretaker government, we were unable to transfer the improvements obtained from negotiations with Brussels to the regional governments.

Last week, we approved the new public deficit and debt targets for the autonomous regions, both for 2016 and for the period 2017-2019. Liquidity funding for the regional governments was also approved to the tune of 4.5 billion euros.

Once these urgent budget issues are resolved, institutional dialogue, which is constant and exists at all levels, will be geared towards holding the Conference of Regional Presidents on 17 January as a priority issue. The work of this conference will be split into two parts: one, of a deliberative nature on the major debates in our country and our commitments with Europe, and the second, where decisions will be made on issues that range from the sustainability of our Welfare State to demographic trends, education, market unity and the internal regulation of the Conference itself.

I trust that this interest in dialogue and spirit of institutional collaboration and loyalty will be reciprocal, and that we will be able to commence an era of constructive dialogue that translates into improvements to the daily lives of our citizens. At the end of the day, this is the common goal of all tiers of government, of whatever political persuasion.

The government will spare no time or efforts in making progress towards reaching agreements that can help satisfy demands at a regional level, but neither will we stop defending the values on which our coexistence is based: the unity of Spain, national sovereignty, equality among all Spaniards and respect for the law.

Ladies and gentlemen,

Our interest in making up for lost time also extends to the international level. There are many tasks that could not be carried out due to the lengthy period with a caretaker government, but we now need to get up-to-date because, furthermore, there are certain ideal circumstances for this.

However, I wish to highlight that the strange political situation we went through this year did not prevent the President of the United States, Barack Obama, from visiting Spain. This is the first time in 15 years that a President of the United States has visited us and I am grateful to President Obama for having kept his commitment, particularly given the difficult circumstances under which he made this trip.

But, aside from the visit by President Obama and our mandatory attendance at the European Councils, it is true that our international presence has been affected by the lengthy period with a caretaker government, something that we have tried to rectify in recent weeks:

• We have kept with the tradition of visiting Morocco as the first overseas trip by the President of the Government. Fortunately, we can say that our bilateral relations are going through their best period ever, with major benefits for both our countries.
• We have attended the Berlin Summit to say farewell to President Obama, at which the largest European countries analysed the refugee situation and the fight against DAESH. This also served to acknowledge the major contribution made by our country to common security and the fight against terrorism, both at a European and a transatlantic level.
• We closed off our period as a non-permanent member of the United Nations Security Council with innovative proposals to combat the new ways to exploit human beings and the fight against terrorism.
• We have also worked towards the election of the new Secretary-General of the United Nations, Antonio Guterres, who visited our country on 19 November.

And I will end by talking about the future.

If we are all able to maintain the responsible and constructive attitude we have shown over the last two months, we will be able to guarantee the Spanish people a stable and prosperous future carved, for which we can thank everyone.

2017 offers us ambitious goals that we can achieve together and that must act as our roadmap for the coming months:

• First, to recover the wealth lost in five years of recession. 10% of our Gross Domestic product, which is easy to say, was lost in the worst crisis in our recent history, which will be recovered before half way through the New Year.
• Second, to create half a million jobs and draw closer to our national target of 20 million Spanish people in work by the year 2020.
• Third ,to complete the process to clean up our public accounts and thus exit the European procedure to control excessive deficits.
• Fourth, to design a model of regional financing that guarantees both social cohesion in Spain and our key public services, such as healthcare and education.
• Fifth, to draw up an education model as agreed between the political parties and the regional governments so as to guarantee the quality of education, its future stability and ensure that one of its main pillars is the recognition and improvement of teaching.
• Sixth, to reach a consensus on the measures to be adopted to guarantee the future of our pension system and study a new strategy to wipe out the scourge of gender-based violence.
• Seventh, to help create a united, supportive and more effective Europe. The consensus on European questions, which Spain has always demonstrated, is our main guarantee in terms of the negotiations that must now begin following the withdrawal of the United Kingdom, the future of the EU.

Each of these goals merits our finest efforts. Any of these agreements would be welcomed by the Spanish people and this must be our main impetus for pursuing the lines of dialogue we have now opened up.

I said in my investiture speech that I was not asking for a blank cheque. I am well aware of the limitations imposed by the present situation, but I am also well aware of the possibilities that this situation offers us.

We are right, as Spaniards, to feel reasonably satisfied at how this atypical year, 2016, has ended, or is due to end, and to feel hopeful about the possibilities that 2017 offers us.

During this year, we have confirmed the idea that Spanish society is moderate and responsible, one that shies away from fanaticism and radical ideas.

In recent months, both the government and the opposition have shown that they can talk and reach agreements; that dialogue and giving ground is possible in order to reach agreements, and that, furthermore, this is essential when that is what the people of Spain have demanded.

We are faced with the opportunity to offer an example of maturity and responsibility; to move away from an historic stalemate towards collaboration that is equally historic.

2016 has offered us two sides to political activity: one which was sterile - a political stalemate and institutional paralysis; and the other, which is fertile - one of understanding and fruitful agreements in favour of the general interest. I believe that there are no doubts about which is better for the country and to which end we must continue persevering in 2017.

Ladies and gentlemen, I am now available to take any questions you may have for me and, since we are in the Christmas holidays and people are away, I would ask you to follow the new protocol implemented by the Government Spokesperson of presenting yourselves and the media for which you work. I believe we all benefit from using this good custom. Thank you very much.

Q.- Marisa Cruz, from the daily "El Mundo". You have given us a lengthy explanation of the benefits of having a Budget in place for this year but we are obviously still lacking one for next year. I would like you to outline a little the scenario we could be facing. In the event that an agreement is not reached on this new Budget, what will you do? Will you call fresh elections?

I would also like you to explain to us how your round of contacts is going with the different political groups in trying to reach an agreement, bearing in mind that the PSOE, for the time being, flatly refuses to provide its support.

President of the Government.- Indeed, it was very important for us to have the Budget approved for 2016. Should this not have been the case, we would not have a Budget for 2017 either and just imagine the consequences that not having a Budget for 2016 would have been.

In principle, there is a very positive figure which is undoubtedly important for the future: we have already approved the ceiling on spending, that is, the maximum amount we can spend; we have already approved the revenue that the State will collect for the coming years and we have distributed the public deficit and public debt targets for the country among the different public authorities. Hence, this has been very positive. As I said before, I believe that this is the most important thing because it affects economic growth, job creation and the well-being of the Spanish people in the coming years.

As from now, we will start to draw up our Budget in the month of January and we will start to talk with the different political groups. We have held quite a few rounds of talks with Ciudadanos, precisely on the occasion of the debate on the ceiling on budget spending; we will continue with these talks, also with the Canary Island Coalition, with the PSOE, and for Spain it is very important that this is approved soon.

Aside from that, looking at what may or may not happen in the event that the Budget is not approved… Look, if it is not approved, we will have to offer a response at that time; meanwhile, the scenario we are looking at, and that is what we will be working towards, is the scenario that we will have a Budget for 2017. I repeat, if we were thinking about not having this, just imagine our attitude going into the negotiations with the rest of the groups. In order to have a Budget, as well as making a good proposal, which we will do, you have to be optimistic and we want to do this to manage to definitively approve it.

Q.- I know that you are not in the habit of meddling in the internal life of other parties…

President of the Government.- You know me well.

Q.- I know you. I don't want you to do that; what I wanted to ask you is whether you believe that a possible victory by Susana Díaz in the Lower House that the Socialist Party predicts in the spring could help contribute to providing backing and support for this legislature and, in some way, consolidate the achievements you have described and if, in contrast, a victory by Pedro Sánchez, the return of Pedro Sánchez to the leadership of the Socialist Party, could compel you to press the red button and, in some way, precipitate new elections.

President of the Government.- Let me tell you two things. The first you already know the answer to. It makes no sense for me to start guessing and analysing this issue, and far less to make a statement on my wishes for the future of the Socialist Party. It makes no sense and I won't do it. The party is on the verge of holding a congress and it will be the socialists, and not me, who have to resolve this, in the best possible manner for Spain and for themselves.

What I do want to say is that I want to see this legislature lasting for four years and that, if we do things well, this will be a legislature which, in addition to being long, will also be fruitful and I will work as hard as I can to achieve this goal. That is what common sense dictates, that is what is normal in a democracy and that is what the Spanish people want, and this party…, this party no, this country, can show the whole world that can govern without anyone having to hold an absolute majority in order to do so.

Q.- Mariano Calleja, from the daily "ABC". I wanted to ask you about dialogue, because earlier you were talking about dialogue on several fronts. I wanted to ask you about the line of dialogue already open in Catalonia and, specifically, about what you expect to achieve in "Operation Dialogue" , as it has been baptised. Do you believe that the pro-independence challenge, which we have seen is being stepped up, can be resolved through dialogue, through these offers of dialogue? Up to what point are you prepared to talk and what are you prepared to offer the pro-independence forces?

President of the Government.- I believe that it is good to talk, above all when we are facing issues of which some are of undisputed importance. The government has expressed its interest in dialogue and I believe that the other party will also be interested in talking. I can't see any reason for not wishing to do so.

There are many issues that affect the people of Spain as a whole, and hence, which also affect the citizens of Catalonia as a whole, about which I believe it is good to talk. I have mentioned some of these in my speech. I believe that the future of our pensions interests all the people of Spain, wherever they may have been born and wherever they may live; also the future education model and also how we can be more effective in combating violence against women.

And at the Conference of Regional Presidents which, as I said, we will hold on 17 January, some issues will be addressed that are very important for people and hence we can debate them. We can talk about the General State Budget; in fact, earlier I said that we have already spoken about this, above all with Ciudadanos, and we also want to talk with the rest of the parties and with the regional governments. We are going to talk about those interests that are important for our people.

Something we are not going to talk about is breaking the law. We are all subject to the law, all of us, and of course I believe that those of us who have the greatest responsibility, those who hold positions of responsibility in government or in parliament have an even greater responsibility. Of course, what we cannot talk about is what is not within our power. That is, if someone wants to talk about the unity of Spain, about the equality of the Spanish people and sovereignty, and hence, about the right to decide about what all the people of Spain want for their country, then I would have to say that we are not going to talk about that, because it is a decision that falls to all of the people of Spain and that we are all obviously under a duty to follow the law.

So, that is my position which is not very different…, which is not very different at all; it is the same as I have maintained throughout my political career on these issues. Of course, the government is not going to authorise any referendum that means doing away with national sovereignty or the equality of the Spanish people, but then I believe that position is well-known. Aside from that, I believe we can talk about anything. I believe that we can do some positive things, but it obviously doesn't seem to me like the smartest move for some people to take further steps in the wrong direction and I obviously believe that this is bad for co-existence and for the general interests of the Spanish people, and I would like all of us to realise just where we are and the period we have had to go through when holding the dialogue that has begun and which we will continue with in the future.

Q.- Cristina de la Hoz, from "El Independiente". Still on the subject of Catalonia, yesterday we became aware, although not of the full content, of a supposed law on a breakaway. There has clearly been an escalation of the pro-independence movement and Mr Homs went so far as to say yesterday that neither the Spanish courts nor the Spanish law are going to be able to halt this. I wanted to know your opinion on the latest turn of events and ask whether you believe that a constitutional reform would be able to resolve this issue, and whether you are truly prepared to address this issue or whether because of the fear that they may ask for a referendum you have already discounted the idea of tackling this issue during this legislature.

President of the Government.- We have indeed heard that there is a law, but it is not in fact a law as such; it is a draft law or a motion that has been tabled because these matters are habitually approved by parliaments, and hence, I won't say another word on this issue because it makes no sense to do so. That is, what would be the point? What would we gain from me saying now what I have just pointed out? "I am not going to follow the law; I am not going to take heed of what the courts decide…". That is not going to go anywhere, it makes no sense. I am offering something that is much more reasonable: I am offering to sit down and talk, to hold dialogue, and I would ask that no further steps be taken in the opposite direction to the one that common sense dictates.

You ask me, will a constitutional reform resolve this problem? I don't think so. I believe that a constitutional reform, unless we do away with our national unity or national sovereignty, or we do away with the equality of the people of Spain - the Spanish people are not going to do that - will not resolve the problem. The issue is to try and build, to be positive and to try and take good decisions on our future. And, I repeat - I have already said this on many occasions but I believe that it is good for no-one to be fooled, - of course, no President of the Government of Spain, and speaking for myself, which I can do, is going to accept doing away with our national sovereignty, with our history, with our unity, nor are we going to allow the people of Catalonia to have to make a choice between being Catalan or being Spanish and European when they are already Catalan, Spanish and European.

Q.- My name is Javier Casqueiro, from the daily "El País". I wanted to insist along these same lines, and you have just mentioned that during your long political career you have always maintained this argument; but the reality in Catalonia is that the process is only gathering more pace towards its separatist goal and yesterday, it is true that this law on a breakaway is paving the way for a referendum that will be held in seven to eight months. So, I wanted to know, if the alternative plan is the following: to talk about all these things you have mentioned?

My second question, not long ago you had a private chat with Mr Puigdemont. What did you decide? Did you decide anything? Have you offered each other anything? Have you ratified your positions?

President of the Government.- When I have something to tell you on this issue, I will do so. You will appreciate that it is not a question of explaining every day what has been talked about, what has not been talked about, or what has been done or what has not been done, because that is the ideal road to nowhere. Hence, my position, I repeat, is very clear. The government is talking at a level of "consellers"; I have indeed spoken with Mr Puigdemont, and we will do so again; but our position is very clear and very well-known, and, in all honesty, I believe that it is what common sense dictates.

A meeting was held the other day between several parties and each one had their own argument and a different opinion on the referendum. What I can say is that a referendum cannot be held to do away with our national sovereignty and to take away the right of the people to decide on their own country.

Q.- My name is Enric Juliana, from "La Vanguardia". Two quick questions. You have mentioned the period under a caretaker government and the vacuum that prevailed at that time, including on the international stage. If I remember rightly, an important meeting was held in Italy in the month of June, which you did not attend, which sought to portray to some extent the intention to re-launch European policy. You were not present as a result of the situation here and, from what my sources say, because the Italian Prime Minister at that time perhaps vetoed your presence. They tried to establish a certain kind of hierarchy at that time: Germany was there, France was there, Italy was there but Spain was not there. I wanted to ask you if you are going to fight to re-order this hierarchy within the framework of European policy, in this framework of re-launching the foreign policy you talked about in your speech.

Secondly, a question about Catalonia. A few weeks ago, the Vice-President of the Government raised an idea in the following vein in a public statement she made: she wondered whether the People's Party had not made some kind of mistake in managing the appeal against the Statute back in 2006, not so much in the concept of the appeal but rather in the way in which things panned out. I wanted to ask you whether the approach you are taking at this time on Catalonia provides for some form of self-critical concept or vision on the past.

President of the Government.- I was recently on a trip to Germany where I met up with the President of the United States, and Germany, Holland, France, the United Kingdom were all there together with us. And there was an Italian representative there who is no longer in power. In other words, I don't know what you want me to say. Spain has obviously been in the place where it has always been and I seem to remember that at that time we did not have a caretaker government, but, as I said earlier, when you have a caretaker government, you cannot do the same things as when you are fully operative which, furthermore, is fully understandable.

But I believe that Spain's participation in European affairs has been very intense over these last four years; believe me when I say that it has been very intense. We have been highly active on some major issues that have taken place to enhance integration; we have been advocating enhancing the Single Market; we have fought for the Energy Union, the Digital Union and the Financial Services Union; we have also made significant contributions to the Fiscal Union, on the Budget and on Political Union. Then, things happen, as you are well aware… Just look, we are going to celebrate 60 years since the Treaty of Rome, I seem to recall, in the month of March, and hence Europe, despite the slowdown, is still forging ahead.

And secondly, the most important thing here is to look to the future. What I want to do is look to the future. I believe we are at a very important point in time, which is also a great opportunity for Spain. The European integration process is pushing on, we must resolve the problems that the 'Brexit' will cause, and we must do many things together and the world continues pushing on with its integration and union processes, with borders coming down, etc., however much incidents may take place such as with the free trade agreement in certain places. And inevitably, we are moving towards a world with fewer borders, with much more liberty and we want to have our place in that world and we will work to that end. And there you have Spain, a country with 46 million inhabitants, which has overcome the worst crisis in its history and which, as I said before, can boast economic progress that few others can aspire to. And 71 million people, without including December's figure, have come to visit us this year. That's hardly by chance!

Q.- My name is María Jesús Güemes, from Cadena SER. You will also kick off this year by holding a national party congress and I wanted to ask if you can resolve a doubt we have as to whether María Dolores de Cospedal, who is here with us today, will continue in her post as the General Secretary of the party.

And I also wanted to ask you if you are afraid of Aznar starting a new party.

President of the Government.- In all truth, those are not issues that fall to me as President of the Government, but don't worry because you will soon have your answer to both questions.

Q.- Beatriz Triper, from "Autónomos" and "Emprendedor". I would like to ask you about the first law you mentioned in your speech which will come into effect in this legislature, the Law on Urgent Reforms to Self-Employed Work. I would like to know what deadlines the government is looking at to approve it and whether it will be during the course of this quarter.

I also wanted to know whether the self-employed will be represented at the negotiating table on social dialogue and whether you are planning to raise the minimum bases for contributions for the self-employed.

President of the Government.- The substantive issues will be addressed, as you would expect, within the framework of a draft law we have agreed on with Ciudadanos on our government pact and which contains the general lines of the investiture agreement which, I repeat, we signed prior to my investiture as President of the Government.

This is a key issue for us. In Spain, there are large companies, medium-sized companies - we should have more - and then, there are a great many small companies as well as many independent contractors. Small- and medium-sized companies in our country went through a rough time, as did independent contractors. Fortunately, after 660,000 jobs were lost, more than 120,000 have now been created in this legislature. There is still a lot to do and we will continue working to support the self-employed. We now have almost 2 million independent contractors contributing to the Social Security system. Out of this number, close on half a million have at least one other worker contracted, and hence, they are essential in our country and for the growth of our economy.

The flat-rate contribution of 50 euros approved some time back was a measure fundamentally designed for the self-employed. More than 1 million new entrepreneurs have benefitted from these measures and, over the course of this legislature and provided that the budget allows this, we will continue to step up social protection measures, such as for the termination of an activity, the compatibility between salaries and pensions, etc.

In terms of dialogue with the self-employed, I believe that there was on-going dialogue over the course of the last legislature, that is, I believe that this was probably one of the groups of Spanish people with whom we have spoken the most in recent times. I have had the opportunity to spend some time with one of the most important associations of independent contractors in Spain recently at a very important event for them and we are obviously aware of what they mean for our country and they will receive, as they have to date, our support and our backing.

Q.- My name is Iñaki Aguado, from the Tele 5 news-desk. I wanted to focus on one of the first questions asked at this press briefing, because last Wednesday, in your visit to the Lower House, you said to us that you were tackling this New Year with "optimism and realism". With a view to the approval, the negotiations, of the Budget for 2017, I want to specifically ask you if you are optimistic about the Basque Nationalist Party and realistic about the Socialist Party.

Secondly, if you will allow me, at this time when we are all closely looking at the Christmas festivities and security, I want to ask you if we are safe.

President of the Government.- Indeed, I said that I was optimistic, but also realistic. In this life, it is important not to forget the reality, because the reality is something unforgiving, it is out there. So, when you take decisions in the belief that the reality is something made up, you run the serious risk of making a mistake and I have already seen many mistakes made over the course of my life. Hence, you must always be realistic whilst at the same time I believe we can be moderately optimistic. We have already reached some important agreements, and there is no reason why there should be insurmountable differences in the content of the General State Budget and, for our part, we will do everything in our hands to achieve this.

At any event, I will add a third word, which is "being prudent" as well. So, we are going to wait to see how the events unfold.

I imagine that the second question you have asked me is related to all those issues affecting citizen security, about terrorism, that we have been seeing in the media in recent days. On these issues, I have always acted in the same manner; I always try, and give my opinions as well, to pay heed to those in the know, and fortunately, in Spain, our intelligence services and our law enforcement agencies are very competent, they are very experienced and they know what they are doing.

In recent days we have decided to maintain alert level 4; that is, we have not said that things are worse, nor that risks are either greater or lesser. What would I say? Absolute security can never exist in any country in the world, but I believe that we can place our trust in, and I obviously do, our law enforcement agencies, and in our intelligence services, who are people who have substantiated their competence over many years.

Hence, we will continue working, we will always continue doing this and we can have confidence - obviously 100% security does not exist and whoever says it exists in any country in the world is not telling the truth.

Q.- Aritz Parra, from the agency Associated Press. I wanted to ask you a question that follows on from the question by my colleague from "La Vanguardia". I would like to ask you, in the context of the European political map you drew at the beginning of your speech, with the arrival of new movements you have defined as populist and in view of the elections coming up next year in Germany, and unless I am mistaken, in France and Holland, whether Spain will try to take advantage of this panorama to take on a greater presence in Europe.

On another note, I also wanted to ask you about 'Brexit'. You are talking about a legislature of dialogue and I wanted to ask you whether certain 'red lines' should be drawn in the negotiations with Theresa May's government. I say this in the context of Spain, which receives a lot of tourists, as you have also mentioned, above all British tourists, who come to visit our country.

President of the Government.- It is true, there will be elections in Europe; in September in Germany; in April and May, I seem to recall, in France, and in May and June, if there is a second round; and elections will also be held in Holland in the spring. These are very important countries for the reasons you are as well aware of as I am. What I would like to see are stable governments. Stability is a very important political value and has a tremendous influence on the economies of countries, in this case on the whole European region, and hence, on the well-being of people.

It is clear that people vote for whomever they see fit and deem opportune, and the only thing I can say is that Europe, which is habitually criticised, is a region that accounts for 25% of global GDP and it is an incredibly important trading power. It has a welfare system (public pension, healthcare and education system) like none other in the world, it has its history, its traditions, its culture and I obviously welcome everything that has been done in Europe in recent years.

That fact, that Europe is the region in the world with the highest standard of living and with the highest levels of equality and quality, well-being and wealth, is very important and that was fundamentally done by moderate parties, which is who the vast majority of people vote for and which have governed for all these years in Europe. In the end, it seems that new parties make sense in a situation of chaos, but what they end up doing is further aggravating the situation of chaos. Hence, what I would like to see is for people's parties to win in Europe but, in the end, what I would like to see is moderate parties winning, which can reach understandings and which represent the vast majority of the population.

Aside from that, our role? Our role in Europe will be the one we are able to carve out for ourselves, but the most important role is helping decisions to be taken in Europe that are good for our citizens. Earlier I mentioned the role Spain played in the integration process. Let me give you an example that I believe is important: the immigration policy being implemented in Spain for many years now is the new immigration policy which has finally started to be implemented by the European Union. What is important is to take decisions that affect people and to encourage others to appreciate that these are good decisions.

As far as 'Brexit' is concerned, clearly our relationship with the United Kingdom is a very special relationship. The United Kingdom is the country in the world where we most invest, to give you just one figure, followed by Brazil. Almost 22% of the tourists that visit Spain are British, for a long time now. More than 200,000 British residents live here and more than 100,000 Spaniards live in the United Kingdom. We have all sorts of relations. These relations have been wonderful over the last few years, at least mine was with David Cameron and also with the new Prime Minister, and I hope they will remain so in the future.

The only 'red lines'? There are 27 of us, we must all negotiate and we are obviously going to set a common position as the European Union. We are not all going to adopt a different position. There can only be one position, which is that of the European Union, and you know that we will start to negotiate when the United Kingdom formally requests its withdrawal from the European Union. In principle, we have been told that this will take place in the first quarter of this year, but this isn't definitive. There are certain judicial rulings pending, as far as I know. And there is one thing that is important: the four fundamental freedoms go hand-in-hand, they must go hand-in-hand and we all have that clear, and I hope that we will keep that clear in the future. That is a key issue for me.

Q.- Bernat García, from "Expansión". You have said that you hope the legislature will last for four years, but you have also stressed the reforms that have been undertaken and in the current scenario in the Lower House, a majority of parliamentary groups, which doesn't include the PP, propose to repeal the laws that I understand are very important for your government, such as the labour reform. Against this backdrop, my question is whether you would be prepared to call early elections rather than allow the reforms undertaken to be dismantled by the Lower House.

President of the Government.- There are two things there. I referred to the first one earlier. I don't want to call early elections, just as I didn't want them to be repeated and the same as I didn't want a third round of elections to be held in December. So, I don't want early elections to be called. I believe that the best thing is stability and the best thing is to play by the rules, and the rules dictate that elections are to be held every four years, and we can't be holding elections every two minutes. And, if no-one holds a majority, the obligation falls on political leaders to reach understandings and make agreements. I will obviously take on this obligation as my own and I will try and reach agreements and understandings with the different political forces. And, clearly when you are looking for understanding and agreements, it is clear that you must cede ground on certain things, whilst others must cede ground on other matters.

I wouldn't like to see the economic reforms of the last legislature repealed on one simple ground: not because my party drafted them, nor to prejudice anyone in any way, but because they worked. You only have to look at the figures. This is a country which suffered five years of negative economic growth and this is a country that lost 10% of its Gross Domestic Product in five years. We started to grow in 2014, and then in 2015 and 2016 we were enjoying growth at a rate of above 3%. So, what you should change is what doesn't work, but I believe you shouldn't change what has been seen to work.

There are a great many committees that have been set up in Parliament, yet - and this is one of my obligations - I will clearly try to help others see that there are some things that it would be an enormous mistake to play with or to change for the sake of it. I know we will have to give way on some things, and we have already done so, but others also need to give way because that is what the Spanish people have said to us all. At any event, we should all be looking at what is in the general interest, in other words, what is important to our citizens as a whole, because, when you toe this line is when you have less possibilities of making mistakes.

Q.- First, I would like you to answer a question that you didn't answer before on whether the new political dialogue with Catalonia is an amendment to the previous dialogue policy.

You have also given specific examples of what political dialogue has meant and what social dialogue means, but as regards regional dialogue the only thing we can see is that there will be a Conference of Regional Presidents without the presence of the Presidents of the Catalonian Governments and the Basque Country. Are you also pleased with the regional dialogue?

President of the Government.- There is no amendment. Over the last four years we have talked about many things, things that are important for our people; these include the Regional Liquidity Fund and the Supplier Payment Plan - more than 50 billion euros in total. We should not forget that. When we came to power, some regional governments were being funded at a 7.75% rate per annum, whereas now they are being funded at less than an eighth of that.

There has undoubtedly been a great deal of dialogue and we want to see more. The thing is that dialogue can never amount to a contract of adhesion. That is, when one party sits down at the table and there are ten issues on the table and you want to win all of them, then it is very difficult to talk, and when one party says "it is this or nothing", or the answer is "yes or yes", then it is hard to talk. And that is not what dialogue is about. I won't call it by any given name, but it is something completely different.

As regards regional dialogue, I would like the two people you have mentioned to attend. They attended the Fiscal and Financial Policy Council, including the representative of the Regional Government of the Basque Country. Mr Junqueras attended the meeting of the Fiscal and Financial Policy Council, and I believe it is important for him to attend; it seemed at first as if he wasn't going to. And I believe that people won't understand it if they don't attend a forum where decisions are taken that affect them - just look, where are their deficit or debt targets, etc.? He attended and I believe that it was incredibly positive because if he hadn't attended, the decisions would have been taken by others and I believe that is very negative.

I would like both Mr Urkullu and Mr Puigdemont to attend. Discussions will be held that I believe are important to them and that interest them, and the fact of attending does not mean you have to change your criteria or opinion on any given issue; it simply means sharing your opinions with other people who have a similar function to their own in other parts of Spain. Hence, I believe that non-attendance is an abdication of one's responsibility. I will obviously not leave an empty seat in my life, because there will always be someone else there ready to take that seat, and while it is yours, it is better not to let someone else fill it.

Q.- Ana I. Gracia, from "El Español". I would like to know what the government will do with the code of good practices for the reimbursement of the "mortgage floor clause", when the Socialist Party has already said it will vote against it and demands for it to be a compulsory procedure.

One last question. I wanted to know, with a view to the New Year, who your preferred partner will be - the Socialist Party or Ciudadanos, which is the party with which you have signed the investiture pact.

President of the Government.- As regards your first question, I am in a position to say the following at this time: first, the courts have handed down a ruling and hence we must comply with the court's ruling; second, this is an issue between individuals and financial institutions, in other words, it doesn't fall within the government's powers - the government has its powers and the judges have others- third, and since this affects many people and represents a very significant sum, the government will do all it can to resolve this by reaching an agreement and without necessarily having to resort to the courts.

That is the position the government is in at this time and, aside from that, we will approve and shore up this procedure at the right time so that agreements can be reached and avoid, as far as possible, any litigation. This may be avoided or not but that, in the end, is down to the financial institutions, and to those individuals and lawyers who may advise them. But yes, the government will try to reach an agreement on this issue, which is very important.

Secondly, the agreement signed by my party, the People's Party, is an agreement with Ciudadanos; hence, it is our preferred partner. That is the case because they supported us in the investiture, that is the case because we have signed a raft of 150 measures with them and that is so because we have agreed that we would also talk about all projects and any discrepancies. Hence, I repeat, with Ciudadanos and then also with those who joined up to an electoral agreement with us, namely Unión del Pueblo Navarro, Partido Aragonés and Foro Asturias.

Then, we will talk with the Socialist Party about the main issues that are important to them, which are important for the future of the nation and hence for our citizens. It is only logical that we will talk with the Socialist Party about the matter of pensions, or education, or that we talk about the ceiling on spending, the deficit targets, NATO and the design of Europe.

Hence, that is our position. Now, our preferred partner, because they voted for us in the investiture and who wished to be the partner of the People's Party, is Ciudadanos.

Ladies and gentlemen, thank you very much and a Happy New Year to your all. Thank you.